GM Korea workers approve strike as wage talks stall

Demands include revaming of 60-year-old wage scheme

07/09/2014|labour-reporter.com|Last Updated: 07/09/2014

SEOUL (Reuters) — General Motors' South Korean workers voted on July 8 to go on strike over salaries and production volume, signalling tough annual wage talks for automakers already grappling with falling earnings due to the stronger won.

Strikes are an almost annual event in South Korea's $173 billion auto industry, but this year's unrest could be more prolonged than usual as workers are calling for the revamping of a 60-year-old wage scheme among other demands.

A union spokesman said 69 per cent of GM Korea's 14,016 workers voted to down tools and walk out for a fourth consecutive year unless they reach a deal.

A union spokesman was not immediately available for comment as representatives were engaged in another round of negotiations with GM Korea management.

A spokesman for GM Korea said the vote did not mean that there will be an actual strike and said it was one of the union's "ordinary actions" during annual negotiations.

"Both sides remain committed to reaching a fair and reasonable labour agreement based on mutual trust and understanding," the spokesman said.

Unions are demanding changes to the wage scheme, which has been in place since 1953, because the country's supreme court ruled late last year that fixed bonuses should be counted as base wages.

Workers want their new contract to comply with the ruling because it would increase various statutory benefits, such as overtime allowances and severance pay, which are adjusted in proportion to base wages.

GM Korea workers are also calling for management to boost production after the U.S. automaker announced plans to stop selling Chevrolet-branded cars in Europe by the end of 2015.

South Korea is one of GM's biggest Asian manufacturing bases, producing nearly all Chevy cars sold in Europe and more than four out of 10 Chevrolet vehicles marketed globally.

GM Korea CEO Sergio Rocha on Monday warned employees that a strike could jeopardise production and job security, and urged them to "stop this vicious cycle before it is too late".

GM Korea and other rivals like Hyundai Motor Co. are wrangling with their individual unions over whether to overhaul the current wage system, which management says could lead to higher labour costs.

Workers at Renault SA's South Korean unit last week voted in favour of a strike, although talks continue, while ongoing wage negotiations at Hyundai are expected to drag into next month.

Hyundai is expected to report lackluster second-quarter earnings later this month as the South Korean won posted its biggest annual percentage gain in nearly three years versus the dollar, eroding its overseas earnings converted into the South Korean currency.